Coal, Climate And Confusion

Coal, Climate And Confusion – Two related events occurred recently which affect the world of energy and climate science. A group of British climate researchers met in Oxford to discuss 4 Degrees And BeyondDespite 17 years of negotiations since the 1992 Rio Earth Summit, global greenhouse gas emissions have continued to rise. Since 2000 the rates of annual emissions growth have increased at rates at the upper end of the IPCC scenarios, presenting the global community with a stark challenge: either instigate an immediate and radical reversal in existing emission trends or accept global temperature rises well beyond 4°… The second event was the publication of a comment in the science journal Nature called The End Of Cheap Coal. The authors Richard Heinberg and David Fridley give their rationale for sounding a warning— World energy policy is gripped by a fallacy — the idea that coal is destined to stay cheap for decades to come. This assumption supports investment in ‘clean-coal’ technology and trumps serious efforts to increase energy conservation and develop alternative energy sources. It is an important enough assumption about our energy future that it demands closer examination.

China to hit 500 Gigawatts of Renewable Power by 2020! – China has just published an astoundingly ambitious and exciting renewable energy plan for the next ten years. China’s plan is to get a total of 500 Gigawatts of renewable energy on the grid by 2020. It explodes wind power from a mere 25 GW on the grid now, to a staggering 150 GW, a six-fold increase on the previous already ambitious plan. Electric power would come from adding 100 GW to make 300 GW of hydro power, adding 125 GW to have 150 GW of wind power, adding 28 GW to have 30 GW of biopower, and going from a half Gigawatt to 20 GW of solar. Giant steps. To put that in perspective: the US will have added 16 GW of all renewable energy combined once the Obama administration Recovery Act funds are allocated – which, while a fabulous change for us, because it doubles the entire last thirty years of renewables on the grid – pales by comparison with 500 GW.

Ministers arrive in Cancun touting optimistic outlook – Ministers from around the world will begin to gather in Cancun today for the UN’s crucial climate change summit with opinion largely divided on the extent to which the negotiations progressed last week. Observers said progress had been made on a number of issues, including proposals for improved forestry protection, the formation of a global green fund, and the independent verification of countries’ emission pledges. However, experts also warned the talks remained on a knife edge over the future of the Kyoto Protocol following Japan’s surprise declaration that it will not support any extension of the controversial treaty. There had been reports over the weekend that a number of developing countries led by Bolivia and Venezuela could abandon the talks if the latest version of the official negotiating text dropped proposals to extend the Kyoto Protocol when it expires in 2012.

What Does it Look Like to Leave the Euro? – The Economist has an excellent piece this week outlining just how difficult it would be to leave the euro.  Bank runs, capital controls, angry voters, and where, exactly do you get currency for people to use?  How could this be done? Introducing a new currency would be difficult but not impossible. A government could simply pass a law saying that the wages of public workers, welfare cheques and government debts would henceforth be paid in a new currency, converted at an official fixed rate. Such legislation would also require all other financial dealings–private-sector pay, mortgages, stock prices, bank loans and so on–to be switched to the new currency.  The changeover would have to be swift and complete to limit financial chaos. Bank deposits would have to be converted at the same time, and the same rate, as overdrafts and mortgages to keep the value of banks’ debts in line with their assets.
Sanders Has Questions for Bernanke on Emergency Lending – U.S. Sen. Bernie Sanders (I., Vt.) has a slew of new questions for Federal Reserve Chairman Ben Bernanke in the wake of new emergency lending data the central bank released last week. In a letter Monday to Bernanke ( Read the full text of the letter), Sanders is asking about potential conflicts of interest between bank executives and Fed officials, and he wants to know exactly how much money the Fed lent to millionaires and billionaires during the financial crisis. “The emergency response appears to any objective observer to have been a clear case of socialism for the rich, and rugged free market capitalism for everyone else,” Sanders, a Vermont Independent, wrote. “Much of the information that you have provided on your web site raises bigger questions than it answers, and some of the information mandated by the law appears to be missing.” Sanders also wants to know how much money the Fed lent to investment funds located in tax-haven areas such as the Cayman Islands.
If Only Laws Were Like Sausages – “I’m so insulted when people say that lawmaking is like sausage making,” said Stanley A. Feder, president of Simply Sausage, whose plant here turns out 60,000 pounds of links a year.
Residential Investment and Unemployment –  One of the key reasons for the sluggish recovery has been the ongoing problems in housing. Usually residential investment (RI) is a major contributor to GDP growth in the early stages of a recovery, but not this time because of the huge overhang of existing vacant homes. This graph shows RI and investment in single family structures as a percent of GDP. Usually RI rebounds strongly at the beginning of a recovery, but this time RI has continued to decline. RI as a percent of GDP is at a post WWII low of 2.22%, and investment in single family structures is near the all time low.  This graph shows single family housing starts (through October) and the unemployment rate (inverted) through November. Note: Of course there are many other factors too, but housing is a key sector. You can see both the correlation and the lag. The lag is usually about 12 to 18 months, with peak correlation at a lag of 16 months for single unit starts. The 2001 recession was a business investment led recession, and the pattern didn’t hold.
Alternatives to Austerity, by Joseph E. Stiglitz – Technically, reducing a deficit is a straightforward matter: one must either cut expenditures or raise taxes. It is already clear, however, that the deficit-reduction agenda, at least in the US, goes further: it is an attempt to weaken social protections, reduce the progressivity of the tax system, and shrink the role and size of government – all while leaving established interests, like the military-industrial complex, as little affected as possible. In the US…, any deficit-reduction agenda has to be set in the context of what happened over the last decade: a massive increase in defense expenditures…; growth in inequality…; underinvestment in the public sector, including in infrastructure; and growth in corporate welfare, from bank bailouts to ethanol subsidies to a continuation of agricultural subsidies… As a result, it is relatively easy to formulate a deficit-reduction package that boosts efficiency, bolsters growth, and reduces inequality.
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